Has Bill Perez lost his mind? Just 13 months after succeeding Nike Inc. (NKE) CEO and founder Phil Knight in late 2004, Perez found himself unceremoniously ousted from the top spot. Despite Knight's pledges to step back from the business, Perez was stymied by a hands-on boss and an insular culture. So what has he done to rebound? He's gone to work alongside another hands-on boss who pledges to cede control, at a company historically criticized for an insular culture.
The 59-year-old executive was named CEO of the Wm. Wrigley Jr. Co., the Chicago-based candy maker, last October, less than a year after the Nike debacle. He succeeds Bill Wrigley, who is now executive chairman, to become the first outsider to run the company in its 116-year history. It is not a challenge either Perez or the 43-year-old Wrigley took lightly. There are few long-term stories of successful power-sharing at the top. But Perez came to the table with something most new CEOs don't have--the lessons learned from a failed relationship and a partner eager to make the new one work. He and Wrigley have taken steps to make sure that what happened at Nike doesn't happen again, stressing clear expectations, constant communication, and the need to present a united front.
Perez joins Wrigley at a point of strength. While Wrigley has struggled to turn around the Life Savers and Altoids brands it purchased in 2005 for $1.5 billion, and global competition in its core gum business has heightened dramatically, the company's new focus on innovation has made it one of the bright points in the industry. In 2006 it introduced 80 new products around the globe, including items such as Life Savers Gummies Fruit Splosions and Extra Professional Mints. After a long history of making few acquisitions and focusing entirely on gum, additions like the Altoids and Life Savers brands, and the purchase of A. Korkunov, the Godiva of Russia, are reshaping the company.
When Perez got a call at his Racine (Wis.) home last August from Wrigley board member Melinda Rich to "feel him out" about a job, he was a bit mystified. After a 10-minute spiel on the company, Perez finally responded: "Mindy, I'm flattered that you guys would even consider me for the board, but I want to go back to work." When Rich clarified that they were considering Perez for the top spot, Perez was stunned: "I just froze, thinking: What happened to Bill Wrigley?"
What happened to Bill Wrigley, who became CEO in 1999 after the death of his father, William, was that he realized he needed to cede some power or risk not being able to handle the increased complexity of the business. Wrigley had known Perez for eight years. He served with him on the board of an industry council when Perez was the head of consumer goods maker S.C. Johnson & Son. There, Perez was CEO in a power-sharing arrangement with the company's fourth-generation leader and chairman, Sam Johnson, and then with Johnson's son, Fisk.
Over the years, Wrigley and Perez developed a bit of a mutual admiration society. They watched each other's career closely, dashing off notes after significant achievements. Perez sent Wrigley an e-mail in late 2002 after the company made a bid for Hershey Co. (HSY) Even though the owners of the candymaker rejected the deal, Perez told Wrigley it was the right strategic move.
That personal history was a good foundation for a partnership. But before signing off, the pair and the board wanted to make sure they were all crystal clear on what a marriage of minds and energies would involve. This was a structure, after all, that simply wouldn't have been possible under Wrigley's father, who oversaw every decision, from the annual budget to the color of the carpeting at headquarters. At Wrigley's request, Duke Petrovich, the chief administrative officer, who has been at Wrigley since 1975, spent a day with Perez discussing Perez' management philosophy and getting a sense of how he would fit into the culture. Consulting firm Mercer Delta was brought in to run the pair through scenarios. The men met, first in Wrigley's suburban Chicago home and then in a hotel nearby, to make sure they had similar views and expectations for how the partnership would work: What would happen if they disagreed on an acquisition? Who would have the ultimate approval? To whom should the senior executives report?
In addition to defining the partnership, Perez was sussing out how other power-sharing duos made the arrangement work. He put in a call to Starbucks (SBUX)Chief Executive James L. Donald. What, he asked, was the secret to his success with Howard Schultz, founder and chairman of Starbucks Corp.? Much of Donald's answer had to do with making sure that information flowed easily and constantly between the two.
Bill W. and Bill P., as they're known internally, have taken that to heart. They send each other e-mails three to four times a day, meet for lunch frequently, and chat over the phone on the weekend, even if it's just to coordinate clothes for a photo shoot. Perez keeps a small notepad to jot down things he wants to discuss with Wrigley and ensures the list never gets longer than a page. It's a far cry from Perez' minimal communication with Knight at Nike: "I thought silence was a form of agreement," he says.
It's equally important, Wrigley's leaders say, to make sure they present a united front. That was something Perez learned at S.C. Johnson. If he and Johnson had an issue, they debated it privately so that they appeared to be of one mind, and all directives appeared to come from both men. It was a dynamic that had been absent at Nike, where it wasn't clear who had the final say. At Wrigley, the Bills are going the S.C. Johnson way. For example, before a week-long meeting of the senior leadership team, Wrigley and Perez disagreed on a couple of points. Rather than debate in front of others, they spent two hours hashing out the issues before the meeting started at 9:30 a.m., and ultimately came to an agreement.
The duo's "divide and conquer" strategy--Perez focuses largely on day-to-day operations and financials, while Wrigley spends much of his time on strategy, innovation, and culture--seems to be working. It's a fluid arrangement. If Perez is tied up at a customer meeting, Wrigley will jump in to check out, say, a manufacturing summit. Already, they've tag-teamed on major decisions like the recent $300 million purchase of A. Korkunov, the chocolatier. While Wrigley was the point person on the deal, Perez weighed in on how to structure it. With Perez' influence, the company decided to buy 80% of the business up front and 20% later, an arrangement that helps to prevent a sudden talent drain, since the owners are retaining a stake.
The market apparently thinks the men are a good match. Shares jumped 13.7% the day Perez' hiring was announced--the biggest one-day gain in 20 years. The stock is up about 60% since early 2000, and revenues have grown from $2 billion to nearly $5 billion. The pair's continued successful collaboration will determine whether Wrigley moves to the next level. "You may want to have this structure in a company," says Wrigley. "But if you've got the wrong CEO, or the wrong chairman, no matter what you do, it's not going to work."
By Adrienne Carter, with Stanley Holmes in Seattle